If you're planning a kitchen or bathroom remodel in South Florida, a construction-to-permanent loan can simplify financing and potentially save on closing costs. That said, while this structure offers convenience, it can also open the door to unforeseen costs and delays if not managed properly. The best approach is to have a definitive budget, a reliable contractor, and proactive coordination to handle permits.
A construction-to-permanent loan generally covers 93% of the project's cost, with homeowners responsible for the remaining 7%. According to MIDFLORIDA Credit Union, the most common pitfall that leads to project delays is not having a solid budget plan. It's prudent to incorporate a 15-20% contingency buffer into the estimate to account for price fluctuations in materials and unexpected labor requirements. The draw schedule for the loan typically aligns with construction milestones, meaning cost overruns can result in extra interest charges before the loan is converted to a mortgage. Collaborating with a licensed contractor who can provide an independent cost assessment also helps in keeping the estimate grounded and averting surprise change orders that inflate the final bill.
In South Florida, permits for renovations differ by municipality, but major remodels usually require a
